Lawyer: List Broker Can't Absolve Caller's DNC Obligation

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A lawyer who follows the direct marketing industry said a recent Federal Trade Commission action shines light on an often-overlooked issue: Who is responsible for complying with the do-not-call registry, the list broker or the telemarketer?

Joseph Lewczak, a lawyer with Davis & Gilbert in New York, referred to a California mortgage broker who will pay $50,000 under a court order filed June 21 on behalf of the FTC. The broker is accused of calling tens of thousands of consumers on the national no-call registry for telemarketers and of failing to pay the annual fee required to access the registry.

The filing in federal court in Los Angeles settles FTC charges against: Executive Financial Home Loan, d/b/a Executive Home Loan, a California corporation; Michael Nikravesh, individually and as an officer of Executive Financial Home Loan; and Ron Fattal, individually and as an officer of Executive Financial Home Loan.

Though the defendants claimed they relied on service providers for their compliance with DNC rules -- specifically by buying "lead lists" of telephone numbers from list brokers such as title companies -- the FTC said it was not enough to rely on the brokers' claims that the lists had been "scrubbed" against the DNC registry. In a scrubbed list, all phone numbers on the registry have been removed no more than 30 days before calls are placed.

Further, though the defendants paid the brokers for the phone lists, they did not properly pay for access to numbers on the registry, leading them to call thousands of registered consumers illegally, the FTC said.

The order finds that the mortgage broker did two things wrong, Mr. Lewczak said: "Number one: They made calls to people whose names were on the do-not-call registry, which they shouldn't have. And number two: They never paid to access the list when they were making calls to people."

Not paying to access the list is an important element of the Telemarketing Sales Rule or no-call provisions that people often fail to realize, he said.

"Unless all you are doing is making calls to existing customers, you have to purchase that list," he said. "If you fail to purchase that list and you make calls to people -- even if their names are not on the do-not-call list -- that is a violation of the rule.

"I have seen other scenarios similar to this, where you have list providers who are selling these lists and saying they have complied with the Telemarketing Sales Rule and have scrubbed them against various lists and are fine to use," he said. "But they are not sophisticated enough to know or they are ignoring the fact that there is an independent obligation on behalf of the seller or telemarketer to still scrub these lists."

One area where Mr. Lewczak said he sees confusion is when a relationship exists between the company that obtained the list and others that might use it, such as dealers or franchisees. The manufacturer/franchiser gets the list of names, scrubs it against the no-call list, then gives the clean list to its dealers or franchisees.

"Typically, in these situations, those dealers or franchisees are independent companies, and they can't rely upon that purchase or use of the DNC by the parent company or the franchiser," he said.


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